State Capitol Week in Review

Posted Thursday, October 18, 2012, at 11:38 AM

LITTLE ROCK - In preparation for the regular session of 2013, the legislature began budget hearings at the state Capitol to review in detail all spending requests by state agencies for the next two fiscal years.

The most important duty of the legislature is to appropriate funds for state government spending. The major budget areas that legislators will consider in the 2013 session are Medicaid and public education. The state Constitution requires the legislature to fund a school system that is adequate and equitable, and before every regular session legislative analysts use economic forecasts to determine how much additional funding is needed to adequately fund public schools.

Analysts reported to the Senate Education Committee that about $63 million in additional school funding would be needed for schools to keep up with inflation. Last year the state provided $2.6 billion to school districts.

The Education Committees will continue working on school funding levels from now through the 2013 regular session.

A red letter day during the budget hearings is Nov. 15, when the governor will present a balanced budget proposal. After comparing the governor's budget plan with spending requests from individual agencies, and after making changes to reflect their own priorities, legislators will finalize a state government budget in the final days of the 2013 session. That likely will be in late March.

The big political battle of the 2013 session will be over Medicaid funding because the governor and some leading legislators are hundreds of millions of dollars apart.

Legislators not only differ with the governor, they differ among themselves about how much to budget for Medicaid in the next two years.

State government spends about $800 million a year for Medicaid in Arkansas, and the federal government matches our funding at a rate of almost 3-to-1. The budget of the Department of Human Services, which administers Medicaid and a wide variety of other social services, has grown from $3.1 billion in Fiscal Year 2003 to $5.6 billion in Fiscal Year 2012, which ended on June 30.

Medicaid officials have warned the legislature of impending budget shortfalls, caused by inflation in health care costs and greater numbers of people becoming eligible for services. According to initial reports, Medicaid officials are preparing to ask for an additional $358 million in funding for next fiscal year. However, that may change by the time Medicaid officials present their spending requests to legislators at budget hearings in mid-November.

The issue of budgeting for Medicaid is complicated by a provision in the federal Patient Protection and Affordable Care Act, also known as

national health care reform.

The act was upheld last summer by the U.S. Supreme Court, which left a key provision up to individual states to decide. That question is whether or not to expand Medicaid to make adults eligible if their yearly income is below 138 percent of the federal poverty level. If Arkansas were to expand Medicaid it would make 250,000 more people eligible, in addition to the 770,000 people who were eligible for Medicaid services last year.

There will be a strong push by legislators to enact stronger accountability measures and tighter restrictions on Medicaid recipients, such as random tests for illegal drug use and requiring higher co-payments.